Since
Intel officials first introduced their ultrabook concept of ultra-thin and
ultra-light notebooks in May, a key concern among systems makers about the
form-factor has been cost.

Systems
makers reportedly have been concerned about being able to keep the price of the
ultrabooks under $1,000, an important number given that Apple's new MacBook Air
comes in with a starting price of $999.

According
to a report in the
DigiTimes news site, Intel officials are unveiling a reference architecture
for ultrabooks that includes BOMs (bills of materials) that come in as low as
$475 for some models. While the BOM costs don't include other costs such as
assembly or marketing, they're being touted as proof that ultrabooks can be
built and sold for less than $1,000, a key point Intel made when introducing
the concept at the Computex show in Taiwan in May.

Intel
Executive Vice President Sean Maloney talked about ultrabooks during his
keynote at the show. The idea calls for very thin and light devices that offer
the performance and capabilities of traditional notebooks as well as features
found in tablets, such as instant on, a constant Internet connection and,
eventually, touch screens. The systems will come in at less than 0.8 inches
thick, with prices lower than $1,000. Maloney predicted that by the end of
2012, 40 percent of all notebooks shipped would be ultrabooks.

Intel
has thrown a lot of effort behind the ultrabook idea. The company reportedly is
offering
OEMs significant financial incentives to build ultrabooks, and in June
rolled out three
new Core processors designed for ultrabooks. Intel executives reiterated
their commitment to ultrabooks during a conference call with reporters and
analysts last month to report second-quarter financial numbers. CEO Paul
Otellini said the company was planning to spend more than $16 billion on
various investments this year, with some of that going into the ultrabook
initiative.

There
has been OEM interest in building ultrabooks, initially from the likes of Asus,
Acer, LG Electronics and Lenovo. In addition, reports surfaced last month that Hewlett-Packard
also was jumping into the fray with two or more models coming out.

However,
despite the interest, OEMs overall are taking a conservative approach to
ultrabooks. One reason is Intel's track record with CULV (Consumer Ultra Low
Voltage) thin notebooks first introduced by the chip maker in 2009. The idea
never caught hold in the market, and now such systems face more competition
from tablets, particularly Apple's iPad.

A
second issue is cost, with some OEMs questioning whether the ultrabooks can be
built and sold for less than $1,000. Some reportedly are taking a wait-and-see
approach, wanting to gauge the market's reaction to Asus' proposed UX21 before
deciding whether to make a move in that direction.

In
a research note in July, Beau Skonieczny, an analyst with Technology Business
Research, said the ultrabook idea hold promise, but that a key to its success
will be in growing sales quickly to enable better prices to buyers.

"By
incorporating newer technologies, such as Thunderbolt [an I/O technology], 3-D
transistors and next-generation Ivy Bridge
[22-nm] processors, Intel is better positioned to take on higher-end tablet
platforms and thin-and-light notebooks, such as Apple's iPad and MacBook Air
products," Skonieczny wrote. "Intel anticipates Ultrabooks will achieve about a
40 [percent] mix in the consumer market by the end of 2012; however, the
success will be dependent on a quick ramp of volume sales to translate to lower
prices for consumers."

Intel's
reference architectures reportedly peg BOM costs for 21mm ultrabooks at $475 to
$650, and $493 to $710 for 18mm models. Officials with the chip maker are said
to be meeting with ODMs (original design manufacturers) in Taiwan
this week to talk about keeping the prices of ultrabooks at less than $1,000.
They also will talk about ultrabooks based on Intel's upcoming 22-nanometer "Ivy
Bridge" chips, which are due out
next year, and "Haswell" CPUs scheduled for release in 2013.